Mr Combet said the installation of small-scale systems and solar hot water heaters continued to be supported under the Renewable Energy Target scheme, with solar PV systems benefiting from generous arrangements that provide support for 15 years worth of generation upfront.

The Energy Networks Association said the government had realised the average electricity customer was paying a high price to fund subsidies for domestic solar systems.

But the Australian Solar Council slammed the decision as unnecessary and badly timed.

Demand for household solar has fallen sharply since the government reduced support for solar and state governments wound back feed in tariffs, and there are no indications demand would have picked up, says John Grimes, chief executive of the Australian Solar Council.

"This is a knee-jerk reaction to a non-existent problem and a pre-emptive strike on Australian families who want to install solar to cut their power bills", Mr Grimes said.

Clean Energy Council spokesman Russell Marsh said the cost cuts stemming from the announcement should effectively mark the end of the review of Australia's 20 per cent Renewable Energy Target.

"The changes remove the effect of the multiplier for solar panels and erode all arguments for further changes," he said.

"The solar industry now urges the federal government to wrap up the current review of the scheme to deliver much-needed stability to the sector."

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